Eagle Materials Inc. (EXP) on Q3 2021 Results - Earnings Call Transcript
Operator: Good day, everyone, and welcome to Eagle Materials Third Quarter of Fiscal 2021 Earnings Conference Call. This call is being recorded. At this time, I would like to turn the call over to Eagle's President and Chief Executive Officer, Mr. Michael Haack. Mr. Haack, please go ahead, sir. Michael Haack: Thank you Lisa. Good morning. Welcome to Eagle Materials conference call for our third fiscal quarter of 2021. This is Michael Haack. Joining me today are Craig Kesler, our Chief Financial Officer; and Bob Stewart, Executive Vice President of Strategy, Corporate Development and Communications. Craig Kesler: Thank you. Michael. Eagle's third quarter revenue was $405 million an increase of 18% in the prior year. This increase primarily reflects contribution from the Cosmos cement business we acquired in March, adjusting for the acquisition and the sale of our Northern California concrete and aggregates business. Organic revenue improved 7% reflecting increased cement and Wallboard sales volume and prices. Third quarter earnings per share from continuing operations were $1.94 an improvement of 87%. As we highlighted in the press release prior year results include the $0.47 per share asset impairment charge. Excluding the non-routine charge third quarter EPS increased 28%. Turning now to segment performance. Let's look at heavy materials results for the quarter highlighted on the next page. The heavy materials sector includes our cement, concrete and aggregate segments. Revenue in the sector increased 21% driven primarily by the contribution from the Cosmos cement business. Organic cement sales prices improved 4% while organic sales volume was flat with our facilities continuing to operate at very high utilization rates. Operator: Your first question comes from the line of Trey Grooms from Stephens. Trey Grooms: Hey good morning. Thanks and congrats on a great quarter. So I guess first off on the Wallboard business volume was very strong and it seems like you outperformed some of the industry numbers that we've seen even for your region. So I guess number one is do you feel like there was any pre-buy going on in the quarter given the price increases that were announced or do you think this is mostly driven by the improvement we've seen in new residential demand and is there any or do you feel like there was any market shifts or anything like that in the quarter? I think I know the answer to that but market share shifts just given the outperformance. Craig Kesler: Yes. Thanks Craig. It's good question. Similar to the last couple of quarters I would tell you that if you look at the regional break down of both housing starts and the Wallboard shipment data across the country, we once again benefited from a very strong regional footprint and where we are generally in the southern half of the U.S. So that remains consistent from where we have been in the last several months. And then in terms of just underlying demand for Wallboard has been very strong and as Michael commented 80% to 85% of Wallboard is driven by residential construction activity. The most important part of that is new residential construction and even more specifically within that single family construction activities is what really driving Wallboard demand at the end of the day and we've all seen the recent housing start data, housing permit data that has continued to be very strong which sets up really well for Wallboard and that's why you are seeing the strength probably for the Wallboard business right now. Trey Grooms: Got it. Okay and then on the pricing from your October increase it looks like it's getting traction, especially given the details you gave us around the quarter ended price I believe was 152. So a pretty good sequential improvement. So as we're looking forward and I know you guys have a January increase. I am sure it's too early to really have a sense for what's going on there just yet but bigger picture as we are looking forward I know you guys are looking for higher volume, you're looking for higher margins in Wallboard. You're getting some traction on pricing. Demand looks good. So how should we be thinking about the longer-term pricing picture for Wallboard as we're kind of looking over the next year or two years as demand continues to improve. Michael Haack: I think you have pointed out several of the important aspects and the most important part of that is demand outlook and where single family construction activities really picking up momentum, momentum we haven't seen in many many years. And I don't want to over exaggerate move back out to the suburbs and single family construction activity but as we have said before single family construction consumes more than two times the amount of Wallboard and single family construction activities is really important and that's what will be the opportunity for further pricing from here. Trey Grooms: Yes. Okay. Well seems like a good setup and then on cement last one for me, and then I'll hop out and pass it on but on the JV volume being down I think 6%. Can you talk a little bit about that and the drivers there. It sounds like in most markets you guys are seeing some pretty decent demand. So can you talk a little bit about what was behind the 6% down in JV and then what you're seeing in that market currently? Michael Haack: Yes. I can take that one. When we look at the Texas market that plant has been one where we reflect up and down with some low not a significant portion of our portfolio that arguably are converting more into away from oil as we view that as a lever back and forth and so some of the demand decrease you do see with some of the reduction of oil well drilling this time and as we worked to migrate that into the construction grade material that we provide with you should see that picking up a little bit more and closing that gap. Trey Grooms: Okay. That's Michael and thanks for taking my question. Good luck in the rest of the quarter. Operator: Your next question comes from the line of Brent Thielman with D.A. Davidson and Company. Brent Thielman: Great. Thank you. Congratulations as well. I had a question on the cement business. You made the comment continue to operate it very high levels of capacity utilization and as far back as I can remember, I think you guys have been in that position. I guess my question is there a desire to expand the capacity of some of these assets right now? Are you seeking to make any preparation for that? Michael Haack: Well, if you might remember in some of the previous calls we did some expansions during this year and we actually set a record cement shipment numbers in our based businesses last quarter, not the last quarter, the quarter before I should say. We did a expansion at our Sugar Creek facility with grinding capacity. We've also done some work around our networking and distribution channels with it. Right now when we look at a lot of our assets we are at capacity that doesn't mean we're not trying to squeeze every single ton out of every single facility that we have and we do have some strategic projects on board to look at expanding capacities. It's just not in the existing facilities. It's just not ones that are significant volume additions with it. So that's why our comments were that we're at for near capacity until some of these projects come in and then capacity is not going to grow significantly from our existing structure. Brent Thielman: Okay. I appreciate that and then you guys have obviously paid down a lot of debt. Leverage ratio is coming down. Any thoughts on kind of growth initiatives right now. I know you guys are still making preparations around the separation. How do you think about potentially looking at M&A today versus a couple of quarters ago? Michael Haack: Yes. Every time we were always looking M&A and M&A has to meet several thresholds for us. As you're probably well aware we're very disciplined and where we play and how we view the businesses. We will always look at opportunities that make sense for us, that fit into our network, that cover returns that we think we could improve those businesses for. So we're always open to that side just the opportunity has to be right for our business. Brent Thielman: Understood. And I guess coming back to cement, I'll give it a shot just curious if you offer any commentary on any price initiatives plans for calendar ‘21 and I'm curious if you think just given the fact that you guys and others in the industry are operating at such high levels of capacity. Do you think the industry can get back to sort of the traditional plan of two price increases this year? Michael Haack: That can be really dependent on our customer base and what the demand profile looks coming forward. As we said in our comments we see the demand being very strong this year. Typically in the industry cement price increases come in the early summer late spring time frame. So we are working with customers on those and having those discussions now and as those unfold we'll be able to provide you more insight on to where those reside in the coming quarters. Brent Thielman: Okay. Last one for me just let the any perspective you have and just in terms of change administration and potential possible regulatory implications to come obviously different view on things than in the prior regime. So just curious what you're watching from Washington on that front. Michael Haack: Yes. That's a good question. One of the things that has made a lot of highlights is the Infrastructure Bill and we continuously watch that. We do want to be pretty frank and you can see in my comments that we think the states are strong by themselves but a federally funded infrastructure bill would be a significant benefit to us and where we want to be cautious with that is that takes those bills are for multi-years and take a lot of planning up front which translates into demand for our products later down. We do think that that is a potential possibility with the new administration and we're going to watch that closely. Brent Thielman: Sorry Michael I was just referring more from the EPA environmental front. I mean anything on that end that you guys are closely monitoring? Michael Haack: We always continuously watch that and monitor that. Our core values are to do more with less. So we are continuously watching on that side and all of our plans have permit levels and limits that we follow stringently and try to drive value out of those with doing more with less with regards to fuels, additives and everything else. So we continuously watch what the new administration may change in those metrics with it and we'll keep our eye on that but we're well prepared for that. Brent Thielman: Okay. Great. Thank you. Operator: Your next question comes from the line of Adrian Huerta with JP Morgan. Adrian Huerta: Thank you. Good morning, everyone and congrats on the results as well. Just going back quickly on the previous question. Do you have any existing plans in place to reduce CO2 emissions? That's my number one question. And then the number two question will be have you been looking on blended cement basically to be able to reduce at least the fact that we understand that some DOTs including the one in Texas is now allowing for lower clinker factors in cement. So are you looking for any opportunities to reduce it by using other substitutes? Michael Haack: Yes. When we look at cement as a whole we've always looked at that aside with this something that we've always been interested in and tied to your first part of the question on your ton of cement and CO2 emissions with that, we can do some blended cement put some additives into it. We have a flat business. We do Portland we always been looking at how to reduce CO2 emissions and part of that is through blending cement and we also have a plant operation that falls in category. So we have been looking at all the aspects of that for several years and we plan doing it going forward also. Adrian Huerta: Perfect. Thank you Michael. Operator: Your next question comes from the line of Anthony Pettinari with Citigroup. Anthony Pettinari: Good morning. On an organic basis your concrete and aggs revenue is up I think 13% year-over-year. I'm just wondering if you can break that out between volume and price and in terms of what's driving that strength if it's fair to say that's exposure to residential and is that kind of growth cadence may be possible over the next couple of quarters or as there is reason it would accelerate or decelerate? Michael Haack: Yes Anthony, good question. I will make couple of comments. First consider that we are, our concrete and aggregate business is really in three markets today Northern Nevada, Kansas city and Austin. And we are in that few markets that really subject to a change in one part of it can really impact the average. So you're right. We saw a good, with frankly the improvement was across both volumes and pricing on organic basis. We just had some really for events in couple of our markets not to mention on the margins side, lower diesel fuel costs really helped us and our teams have done a fantastic job of some operational efficiencies as well. So far we have done very well. It looks like housing will continue to be strong for us and that's engineers for our concrete and aggregate volumes. Anthony Pettinari: Okay. That's helpful and then is it possible to quantify the benefit you saw from hydrocarbon deflation in the quarter and is there a way we can think about the impact of that in 4Q either lessening or reversing just based on how these costs are trending in January so far. Michael Haack: So when you say hydrocarbon when have along the concrete business we saw the benefits there it was under a million dollar in total for the quarter. On the Wallboard and paper side where we generally use natural gas those costs have been pretty flat for year now sub $3 a million. So it fluctuates a little bit within that range but it has improved dramatically over the last three or four years. Anthony Pettinari: Okay. That's helpful. I will turn it over. Operator: Your next question comes from the line of Jerry Revich with Goldman Sachs. Jerry Revich: I'm wondering if you could talk about on infrastructure. We've seen lettings activity is slowing over the course of this year. And the last time we had discussions about infrastructure bill that drove to further slowdown the lettings, can you just talk about what you're seeing in your markets in terms of pace of the DOT activity and if the hope for federal money is driving any change in the peso lettings either to-date or from here? Thanks. Craig Kesler: Yes, Jerry in my comment section kind of I was alluding to some of that is that we see the stage responsible for a lot of the infrastructure building spend and the same tax receipts from all of our analysis look to be at or near pre-COVID levels and some of these higher than pre-COVID levels there wasn’t if in the second quarter there. Again I know the states have some pressure on where that money goes to but we have not seen a significant drop in any of our markets or even a drop at a lot of our markets on that side with it. So we see that the states are more responsible. As it comes to the federal side those take longer to materialize. That will be some extra benefits that the states will get for support from the federal government if a bill is to be passed. But again, that would be by the time those projects come into play the engineering works done on those and the work in construction start to demand for our would be kind of like we say with the housing starts and couple of quarters down the road where we would see this significant on that side. But for the states we operate in ourselves we feel fairly comfortable with what the this next year. Jerry Revich: Okay, and then on Wallboard in the past you folks had a single price increase a year and obviously you put two increases in over a short period of time here. Can you just talk about your pricing philosophy and message to customers going forward? When are you telling customers who generally expect price increase announcements? How much lead time do you expect to give them? If you just talk about how the framework has changed versus a couple of years ago when January one day. Michael Haack: Yes Jerry. Look I think I would tell you that the demand environment is more important than the cadence of the price increase. As you point out years ago we went to an annual price increase environment setup and that was the right timing for the situation we were in. Given the demand environment that we find ourselves in today there's no doubt that cadence of pricing has changed and that's very consistent with the demand environment what we see today. So I wouldn't use past experiences to totally count on the cadence of pricing. Jerry Revich: And Craig the lead time can you just comment on that? How much lead time do you seek to give customers future pricing actions? Craig Kesler: Yes. Well, we won't go into exactly how we negotiate with customers. It's just going to be demand driven from here. And so far the demand environment has been very supportive of our overall business. Jerry Revich: Okay. Thank you. And lastly I appreciate the update on the separation. I am wondering if you can just expand on your prepared remarks and just talk about to some side posts or some areas that you're working on to complete the separation and if you care to comment on any updated thoughts on net debt allocation between the businesses. Craig Kesler: Yes, the separation obviously is a standing discussion point at our board meeting. So we will be having another discussion about this at that time. So I really don't have any further comments or any clarification around that separation at this time until after we have a board meeting and when we discuss it but we discuss in every single board meeting as soon as we clear path forward we will be announcing that up. Jerry Revich: Okay. Thank you. Operator: Your next question comes from the line of Stanley Elliott with Stifel Nicolaus. Stanley Elliott: Good morning Michael, Craig. Thank you guys for taking my question. I think can you all talk about weathers delivery times on the Wallboard side or maybe describe kind of what you all are seeing inventory levels at the dealer level more broadly across the industry? Michael Haack: Yes. Thanks for the question. I think a couple of thoughts there. One is the supply chain and I'll speak more broadly for anything the supplying the whole building business right now is being stressed and stressed in a way that it hasn't seen in many, many years. It's one thing to navigate a million housing starts another thing to navigate an environmentally a million and half or more houses start. So when you are talking about appliance as a Wallboard that supply chain is being stressed. And so lead times are expanding out a little bit in that environment. So other than that I wouldn't say there is any other significant changes there. Stanley Elliott: And then turning kind of back to the M&A environment. You mentioned have an always-on kind of always looking would you say you're looking more at the heavy side or on the lighter side or else being equivalent and maybe where there are more opportunities now? Michael Haack: Yes. So like I said we are always. We look at a lot of opportunities that come available and we are very selective in what we choose with it. We had any long term strategy to grow our heavy side of the business and our strategy has not changed over the at all. So we know look at opportunities on both sides of the business but we really focus on the heavy side of the business for the maximum, the most growth opportunities. Stanley Elliott: Great guys. Thanks for the time. Operator: Your next question comes from the line of Adam Thalhimer with Thompson, Davis & Company. Adam Thalhimer: Hey good morning guys. Michael Haack: Good morning. Adam Thalhimer: What is your Wallboard capacity? I mean when we see housing starts and permits up 30% just trying to think through how much you can grow your Wallboard shipments? Michael Haack: Yes. I think we disclosed this obviously in our form 10K. It's just shy 4 billion square feet with five plants four of which are located West of Mississippi sits on natural gypsum deposits which are extremely right near the facilities and the other plant is in South Carolina with the long term synthetic substance supply contract there. And so I think what you have seen is the housing demand breakup that's pushing demand, pushing utilization rates, but there is a finite shipping range from which you can ship from. So that is one thing if you look at growth in Wallboard demand we have been very fortunate that has grown stronger in our market than the several others. Adam Thalhimer: But I mean you could conceivably see scenario we are at that 4 billion? Michael Haack: Look I think we are not there yet. We still have room to go at our facilities certainly in Oklahoma and New Mexico but certainly utilization rates have certainly picked up in the last couple of months. Adam Thalhimer: And then Craig what should we expect for a Cosmos volumes in the March quarter? Craig Kesler: Yes. The market of that plant operates as more of northern market. So I would say it's a similar environment as Illinois and Kansas City where very strong June, September and even in the December quarter but this quarter, the March quarter is always about winter and the environment that we find ourselves in. So far winter has been pretty mild for most parts of the country, that like change but this will be and January is always the slowest quarter for the cement business because there's more seasonality here. Adam Thalhimer: I would have to ask March. Craig Kesler: To recall we only took ownership of that asset like March 6, so we don't have it for a very small portion of the quarter and so you're still going to have a year-over-year comparisons issue that will help for you. Adam Thalhimer: No. I get that. What is Cosmos so, just looking at Cosmos what do they sell in the March quarter last year? Craig Kesler: Yes. So some of that like I said two months of the quarter we did own it. And so we wouldn't go in that level of granularity nor we give you simply one month that we owned in March. Adam Thalhimer: Okay. Thanks. I will turn it over. Operator: Your next question comes from the line of Philip Ng with Jefferies. Unidentified Analyst: Hey guys this is actually Collin on for Phil. Just wanted to touch on the cost on the Wallboard business. It looks like maybe more than offset some of that margin benefit from the higher operating leverage and higher prices. I was just wondering if you can talk about the different drivers there and how you're thinking about the headwinds going forward and I guess just feasibility to offset these costs with those price increases. Michael Haack: Yes, Collin keep in mind the price increase was only implemented half way through the quarter. So we really didn't see the full benefit of the price increase this quarter. In terms of owning the cost side there was an input cost increases predominately in the cycle fiber cost but we did see those creep up a little bit year of this quarter. It's too early to tell where those prices are going to go longer term. But that was predominantly what was driving this quarter's cost increase. Unidentified Analyst: Got you. And then just on the paperboard business external volumes they were flat, internal volumes were down 3% but you're adding a high speed capacity. Demand for Wallboard appears strong and just appears to be getting stronger as we head into calendar year 2021. Can you just walk us through the divergence and volume trends between the Paperboard and the Wallboard business? Michael Haack: Yes that happens from time to time just given inventory levels at the Wallboard plants versus at the paper mill you can see that cadence dislocate for a period of time and it has to do just with buying patterns that both we do internally and some of our external customers. As we've said that plant continues to operate in the sold out position. So in addition to the inventory swells we have also moved away from non-contract sales in terms of third-party sales to make sure that we satisfy the needs of our customers. So the new equipment is installed, learning to operate it there is some uptime that we'll continue to improve on but you should see those over a broader period of time more of an annual basis. You'll see that those volume changes be in line with each other. Unidentified Analyst: Okay and then just pivoting back to demand on the Wallboard side, just the robust housing starts and permits and things like that point to some really strong demand but you're also hearing some bottlenecks from the builders about labor and things like that. So I guess just in terms of Wallboard volumes can typically got into a low single digit volume over time. Is this 6% trailing 12 month growth rate sustainable in this kind of environment or do you think that that's a little aggressive just given some of the constraints that the market has seen? Michael Haack: Yes. Look I think in our markets and again I think we've highlighted this multiple times our markets are continuing to outperform the national average. So we don't necessarily give guidance specifically but given the current strength in home building this is a pretty sustainable pace when it comes to Wallboard demand and again in our markets I can't speak we don't go to the northeast, we don't really go to the northwest much but we continue to see strength in our markets and we like where we're positioned. Unidentified Analyst: Great. Thank you very much. Operator: Your next question comes from the line of Josh Wilson with Raymond James. Josh Wilson: Good morning Michael and Craig. Thanks for sitting in and congratulations on the quarter. Michael Haack: Thanks Josh. Josh Wilson: I wanted to circle back on the paper board question. Margins were down a fair amount there. Is that purely a function of the timing of the recycled fiber and that's a headwind that's yet to come to the Wallboard side but should normalize or are there some other factors impacting the margins? Michael Haack: Certainly the biggest piece of that is the input costs on the recycled fibers that then get passed through the Wallboard business on a quarterly lag but as I said, I think we'll also continue to see efficiency improvements now that we've installed all of the equipment at the paper mill that should benefit us as well. The other thing I do want to make sure and highlight when you look at operating income realize there is a pretty decent amount of depreciation that's been added into that business. So you really have to look at it on an EBITDA margin basis on a year-over-year comparison because of that incremental depreciation. Josh Wilson: Got it and then your aggregates pricing slipped. Can you talk through what the driver was there? Michael Haack: Yes. Within aggregate pricing you've got base pricing and sand and rock and we just had a little bit more base sales on average or on the weighted average relative to where we were last year and then base is generally lower priced products. So nothing other than that. Josh Wilson: Okay. And then last one for me. As it relates to the split can you give us some more color on what tasks you've completed already to prepare for the split and how quickly you can consummate it once the environment is to your liking. Michael Haack: It's probably a little too early to comment on exact timing or cadence but look there are some long lead items whether that's with the SEC on the financial reporting side, with the IRS. So those are things that we've been working on we'll continue to work on. There is other administrative items in the background that will be completed but that's to be done going forward. Josh Wilson: Okay. Good luck with the next quarter. Operator: A this time I would like to turn the call back over to Mr. Michael Haack for any closing remarks. Michael Haack: Thank you very much for attending our call and we look forward to talking to you at the end of the next quarter. Operator: This concludes today's conference. You may now disconnect.
Eagle Materials Inc. (NYSE: EXP) Fiscal Year 2025 Earnings Report Highlights
- Eagle Materials Inc. (NYSE:EXP) reported a record revenue of $2.3 billion for the fiscal year 2025 but fell short of earnings expectations with an EPS of $2.08.
- The company's quarterly revenue was $470.18 million, missing the Zacks Consensus Estimate, and indicating a pattern of underperformance in surpassing consensus EPS estimates over the past four quarters.
- EXP's financial metrics reveal a P/E ratio of approximately 16.16, a moderate debt-to-equity ratio of 0.70, and a slight decrease in net earnings to $463.4 million for the year.
Eagle Materials Inc. (NYSE:EXP) operates in the building products sector, focusing on concrete and aggregates. The company recently reported its earnings for the fiscal year 2025 and the fourth quarter ending March 31, 2025. Despite achieving a record revenue of $2.3 billion for the full fiscal year, the company faced challenges in meeting earnings expectations.
On May 20, 2025, EXP reported earnings per share (EPS) of $2.08, which fell short of the Zacks Consensus Estimate of $2.34. This represents an 11.11% negative surprise. The EPS also decreased from $2.24 in the same quarter last year. Over the past four quarters, EXP has only surpassed consensus EPS estimates once, indicating a pattern of underperformance.
The company's revenue for the quarter was $470.18 million, missing the Zacks Consensus Estimate of $622.11 million by 1.59%. This is a slight decline from the $476.71 million reported a year ago. Despite the quarterly shortfall, EXP achieved a record revenue of $2.3 billion for the full fiscal year, marking a slight increase from the previous year.
EXP's financial metrics provide insight into its market valuation. The company has a price-to-earnings (P/E) ratio of approximately 16.16, indicating how the market values its earnings. The price-to-sales ratio is about 3.38, reflecting its market value relative to revenue. The enterprise value to sales ratio is around 3.82, showing the total valuation compared to sales.
The company's financial health is further highlighted by its debt-to-equity ratio of approximately 0.70, indicating a moderate level of debt. The current ratio of about 2.76 suggests that EXP can cover its short-term liabilities with its short-term assets. Despite these financial metrics, the company reported a 3% decrease in net earnings for the year, totaling $463.4 million.
Eagle Materials Inc. (NYSE:EXP) Quarterly Earnings Preview
Eagle Materials Inc. (NYSE:EXP) is a leading name in the construction materials industry, focusing on the production of gypsum wallboard and cement. As the company prepares to unveil its quarterly earnings on May 20, 2025, investors are eagerly awaiting the reported figures. Wall Street's anticipation includes an earnings per share (EPS) of $2.34 and a revenue forecast of approximately $479 million.
- The expected EPS of $2.34 for the quarter ending March 2025 signifies a 4.5% increase from the previous year.
- Revenue is projected to hit $479 million, a modest 0.2% growth year-over-year.
- The company's financial health is highlighted by a price-to-earnings (P/E) ratio of approximately 17.00, a debt-to-equity ratio of roughly 0.70, and a current ratio of about 2.76. The anticipated EPS of $2.34 for the quarter ending March 2025 marks a 4.5% rise from the prior year, as underscored by the company's performance.
Revenue is expected to reach $479 million, indicating a slight 0.2% increase compared to the same quarter last year. These figures suggest a consistent growth path for Eagle Materials, despite a downward revision of the consensus EPS estimate by 3.3% over the past month. Such adjustments in earnings forecasts are pivotal as they often foretell potential investor actions and have a significant correlation with the short-term price movement of a stock.
The market is closely monitoring whether Eagle Materials can exceed these forecasts, as this could positively impact the stock's price. On the other hand, failing to meet these estimates might lead to a decrease in stock value. Eagle Materials' financial indicators provide deeper insight into its market standing. With a P/E ratio of approximately 17.00, investors are willing to pay $17 for every dollar of earnings. The company's price-to-sales ratio is about 3.55, reflecting the value attributed to its sales. Moreover, the enterprise value to sales ratio is around 4.00, indicating how the market values the company's total worth in relation to its sales.
The company's financial stability is further highlighted by its debt-to-equity ratio of approximately 0.70, showing moderate financial leverage. A current ratio of about 2.76 suggests that Eagle Materials is well-equipped to meet its short-term liabilities with its short-term assets. As the earnings release date approaches, the company's performance and future earnings outlook will largely hinge on management's discussion of business conditions during the earnings call.
Eagle Materials Inc. Faces a Challenging Quarter.
- Eagle Materials Inc. reported a decrease in earnings per share (EPS) to $2.24, missing analyst expectations.
- Revenue for the quarter was approximately $476.7 million, showing a modest year-over-year growth of 1.4%.
- The company announced record fiscal year 2024 revenue of $2.3 billion and a 9% rise in diluted EPS to $13.61.
Eagle Materials Inc. (NYSE:EXP), a key player in the building products, concrete, and aggregates industry, recently disclosed its financial outcomes for the quarter ending March 2024. The company, known for its significant contributions to construction and building materials, faced a challenging quarter, as evidenced by its earnings per share (EPS) and revenue figures. These results are particularly noteworthy as they provide insights into the company's performance against Wall Street's expectations and its financial health over the past year.
For the fiscal fourth quarter, EXP reported earnings per share of $2.24, which did not meet the anticipated $2.72 set by analysts. This represents a notable decrease from the previous year's EPS of $2.79, marking a -17.65% surprise against expectations. Such a decline in EPS is a critical indicator of the company's profitability challenges during the quarter, despite having outperformed earnings forecasts in the preceding quarter with a positive surprise of 4.49%.
On the revenue front, Eagle Materials reported approximately $476.7 million, slightly missing the Zacks consensus estimate by 0.40%. This figure, however, represents a modest year-over-year growth of 1.4% from $470.13 million, showcasing the company's ability to increase its revenue despite the market's tough conditions. It's important to note that this is only the second time in the last four quarters that the company has not surpassed consensus revenue estimates, highlighting the variability in its financial performance.
For the fiscal year 2024, Eagle Materials announced a record revenue of $2.3 billion, a 5% increase from the previous year, and net earnings of $477.6 million, up by 3%. These figures, along with a 9% rise in diluted earnings per share to $13.61 and a 7% improvement in adjusted EBITDA to $834.5 million, underscore the company's strong performance over the year. The repurchase of 1.9 million shares, investing $343 million back into the company, further demonstrates Eagle Materials' commitment to enhancing shareholder value.
In terms of valuation metrics, EXP's price-to-earnings (P/E) ratio stands at approximately 17.28, indicating the market's valuation of its earnings. The price-to-sales (P/S) ratio of about 3.69, along with the enterprise value-to-sales (EV/Sales) ratio of roughly 4.17, reflects the company's market valuation in relation to its sales. Additionally, the enterprise value to operating cash flow (EV/OCF) ratio of approximately 16.74 and an earnings yield of about 5.79% offer insights into the company's profitability and valuation from an investor's perspective. The debt-to-equity (D/E) ratio of around 0.84 and a current ratio of approximately 2.62 suggest the company's financial leverage and liquidity status, respectively. These metrics are crucial for investors to understand Eagle Materials' financial health and market position.
Eagle Materials Inc. Quarterly Earnings Preview
- Eagle Materials Inc. is expected to announce its quarterly earnings with an EPS forecast of $2.72 and projected revenue of $484.69 million.
- The company has a history of surpassing consensus earnings estimates, boasting an average earnings surprise of 6.5% over the last four quarters.
- Valuation metrics such as the P/E ratio of 17.64 and P/S ratio of 3.92 provide insights into the company's market valuation.
Eagle Materials Inc. (NYSE:EXP), a leading producer of construction materials including gypsum wallboard and cement, is set to announce its quarterly earnings on Tuesday, May 21, 2024, before the market opens. This announcement is highly anticipated by investors and analysts alike, as it provides a snapshot of the company's financial health and operational performance. Wall Street's expectations are set with an earnings per share (EPS) forecast of $2.72 and projected revenue of approximately $484.69 million for the quarter.
The company's financial outlook, as highlighted by Zacks Investment Research, suggests a slight decline in EPS by 2.5% year-over-year, with an adjusted revenue expectation of about $478.6 million, indicating a modest increase of 1.8% from the previous year. These projections have remained stable over the past 30 days, signaling a consensus among analysts about the company's performance for the quarter ending March 2024. This stability in earnings and revenue estimates underscores the importance of monitoring changes in these forecasts, as they can significantly influence investor reactions and the stock's short-term price movements.
Eagle Materials has a history of surpassing consensus earnings estimates, with an average earnings surprise of 6.5% over the last four quarters. This track record of exceeding expectations has contributed to the company's reputation for reliability in its financial reporting. However, the slight downward revision of the EPS estimate to $2.72 from $2.77 over the past month reflects a cautious outlook from analysts, despite the company's past performance.
The anticipated financial results are believed to be driven by improved residential and infrastructural activities, which could have provided a boost to Eagle Materials' performance in the fiscal fourth quarter. Nonetheless, concerns about lower pricing for Wallboard and Paperboard remain, potentially impacting the company's financials. As the earnings release date approaches, investors and stakeholders will be closely watching for any deviations from these projections, as the company's ability to meet or exceed analyst expectations could significantly influence its stock price in the near term.
Eagle Materials' valuation metrics, such as the price-to-earnings (P/E) ratio of approximately 17.64 and the price-to-sales (P/S) ratio of about 3.92, offer insights into how much investors are willing to pay for each dollar of earnings and sales, respectively. These ratios, along with the enterprise value to sales (EV/Sales) ratio of roughly 4.37 and the enterprise value to operating cash flow (EV/OCF) ratio of approximately 17.51, highlight the company's valuation in relation to its sales and operating cash flow after adjusting for debt. With an earnings yield of about 5.67% and a debt-to-equity (D/E) ratio of around 0.78, Eagle Materials demonstrates its profitability from an investor's perspective and its financial leverage in terms of debt used to finance its assets. The current ratio of approximately 2.61 further indicates the company's ability to cover its short-term liabilities with its short-term assets.
Eagle Materials Reports Q4 Beat, Increases Repurchase Authorization
Eagle Materials (NYSE:EXP) reported its Q4 results, with EPS coming in at $1.90, beating the Street estimate of $1.77. Revenue was $413.1 million, compared to the Street estimate of $400.62 million. The company also increased its repurchase authorization to 10.3 million (25% of outstanding share count).
Despite broader concerns around energy cost inflation and a decelerating/declining housing backdrop, the company continued to deliver strong pricing gains and margin expansion across both its Heavy and Light Materials segments.
Moreover, the company has enacted mid-year price increases across the majority of its business lines to further offset any inflationary pressures (particularly in energy/freight), which should embed some margin resilience in the upcoming fiscal year.
Eagle Materials Reports Q4 Beat, Increases Repurchase Authorization
Eagle Materials (NYSE:EXP) reported its Q4 results, with EPS coming in at $1.90, beating the Street estimate of $1.77. Revenue was $413.1 million, compared to the Street estimate of $400.62 million. The company also increased its repurchase authorization to 10.3 million (25% of outstanding share count).
Despite broader concerns around energy cost inflation and a decelerating/declining housing backdrop, the company continued to deliver strong pricing gains and margin expansion across both its Heavy and Light Materials segments.
Moreover, the company has enacted mid-year price increases across the majority of its business lines to further offset any inflationary pressures (particularly in energy/freight), which should embed some margin resilience in the upcoming fiscal year.
Eagle Materials Reported Q3 EPS Beat, In-Line Revenues
Eagle Materials Inc. (NYSE:EXP) reported its Q3 results, with EPS coming in at $2.53 (3% above the Street estimate) and revenue and EBIT of $463 million and $137 million, respectively, both in line with the consensus estimates.
More importantly, management made a few comments during the earnings call, which analysts at Berenberg Bank find encouraging. First, the company is ramping production of Portland Limestone Cement (PLC), which not only reduces its carbon footprint, but should also add around 8-12% to cement capacity over the coming years (depending on the plant). Secondly, management appeared confident that there was further upside potential for the Wallboard operating margin despite investor concerns that the company may have reached a peak at around 37-38%.
